Managing charity money guide - setting up strong financial controls

Having strong financial systems and controls is very important to help protect your charity, and ensure it runs effectively and can pay its debts. It’s a good idea to keep a formal document that sets out any financial controls that your charity uses.

Types of financial controls

A number of different financial controls are available to charities and the ones that you use will depend on the complexity and size of your charity’s resources. Some examples include:

1.Requiring multiple signatures on payments and receipts

It is a good idea to ensure that, for any money leaving the charity or coming into it, more than one person is involved in authorising and completing the transaction. Having more than one person involved means that there is a higher level of supervision involved in your charity’s financial transactions.

2.Keep a budget and track your performance against it

A budget is a document that shows a prediction of how much money you expect you will receive and how much money you will spend within a given period. Consider establishing an annual budget and track your performance against it throughout the year. You should also look into any significant variations.

3.Provide up-to-date financial reports to your charity’s board at regular intervals

Your charity’s board has ultimate responsibility for the financial health of your organisation and they should receive and review a report on its financial position regularly.

4.Establish clear financial delegations

If there are people in your charity who are authorised to approve purchases and other transactions, make sure your policies and procedures clearly establish how much they are permitted to spend without seeking approval. For example, a board might decide that the CEO can spend up to $5 000 before requiring its approval for any expenditure.

5.Keep information about your accounts secure

Make sure any passwords to online banking or the keys to any petty cash tin or safe are kept secure and that you know who has access to them.

6.Have an ongoing practice of reviewing and strengthening financial controls

You could have a regular item on the board agenda or schedule.